Those who want to demolish listed buildings do not often attract sympathy, but the plight of a St Albans businessman must be an exception.

A week after Stephen Dorrell, the Secretary of State for National Heritage, announced plans to end the "unhealthy secrecy" of the listing procedure, under which owners were told a property had been listed only after it was a fait accompli, Amerigo Brusini, 43, is experiencing the disastrous outcome of exactly that situation.

Two years ago he spent £211,000 on a derelict Thirties house in Hatfield, Hertfordshire, which had planning permission for demolition and redevelopment. The next day the house, built by the pioneer Modernist architect FRS Yorke, was listed Grade II*.

Rather than being able to demolish the Cubist-style house, known as Torilla, to build himself a family home, Mr Brusini was required to repair it. If he did not, it could be bought compulsorily by a local authority at a fraction of the price.

Yet the house had always been almost uninhabitable because of faults in its experimental design. The concrete walls and roof were too thin and lacked thermal insulation. Mould grew on walls and curtains and clothing rotted when it was heated because of excess condensation on cold walls.

This week the Department of the Environment refused Mr Brusini's appeal to be allowed to demolish and rebuild - although it did concede that "from [Mr Brusini's] viewpoint the timing of the listing of Torilla was most unfortunate".

His architect, David Lewis - who worked in FRS Yorke's practice - estimates that Mr Brusini, who has already spent £60,000 on legal fees, needs to spend £400,000 on structural repairs to make it habitable. "It used to be owned by a widow [who] progressively abandoned it. The curtains still hang there - if you look closely you can see they are rotting, like a scene from Miss Havisham's house in Great Expectations," Mr Lewis said. "Torilla was listed in 1983 but in 1984 the then Environment Secretary delisted it and gave the widow permission to demolish and rebuild. That was the position when Brusini saw it for sale. He became legal owner on 11 May 1993. The next day he was told it had been listed and that that had been effective from 23 April. Obviously he would not have bought it if he had known. Torilla is now effectively worthless unless it catches the fancy of a buyer rich enough to buy it outright and spend up to half a million pounds to make it habitable."

Mr Brusini is not entitled to compensation, which he believes is a travesty of justice. "They wanted me to repair Torilla, then they might have allowed me to build a new house on the same three-acre site," he said. "But repairing Torilla would cost at least £400,000. Even if I sold it afterwards I wouldn't nearly cover my costs. English Heritage say Torilla is such a precious building, but it has no market value."

English Heritage is not responsible for planning decisions, but Dr Diane Kay, a listing inspector responsible for 20th-century architecture at the quango, yesterday defended the listing as being "the first commission of FRS Yorke, a major figure in the introduction of the Modern movement into Britain in the 1930s".

The heritage department said: "Mr Dorrell has announced that he is bringing forward a Green Paper which will discuss the options to the current listing system."